Interpreting Council
Financial Statements




Boy Scouts of America
© 1997
Updated February 2001
Boy Scouts of America
         Irving, Texas
              80-263
Table of Contents
Introduction...............................................................................................
Interpreting Financial Statements       Boy Scouts of America
                                    2         Updated 2/2001
Introduction
Background             Most local Boy Scout councils produce the statements discussed in this guidebook to
  ...
Background Information
Account                  In the council’s financial system, as in all accounting systems, every acc...
The Capital Fund accounts for all fixed assets that the council owns, the related
                         liabilities, if...
Statement of Financial Position
Overview                  The Statement of Financial Position is a snapshot in time that t...
Statement of Financial Position

                                                                   SAMPLE
               ...
Statement of Financial Position—Assets
   Current Assets            This is the first category listed on the statement. Th...
Deferred Camp            These are all prepaid expenses for camps. As the camp is completed, balances
      Expenses      ...
Statement of Financial Position—Liabilities
 Current Liabilities        These are those short-term claims on the council r...
Statement of Financial Position—Deferred Income and
Noncurrent Liabilities
 Deferred Income            These include parti...
Statement of Financial Position—Net Assets
     Net Assets            These are segregated based on restrictions that have...
Statement of Financial Position—Net Assets
    Permanently       This represents the net worth of the council that has a d...
Liquidity Ratio—Unrestricted Operating Fund Liquidity
Ratio (30-Day Demand)
                           ØNote: The liquidit...
Analysis of the Statement of Financial Position
Is Your Statement          Remember that this statement is a presentation ...
Use of Correct             Land, building, and equipment items should all be in the Capital fund (fund
Funds              ...
Statement of Changes in Net Assets
Overview                This statement (often called Statement of Activities) is design...
Statement of Changes in Net Assets
                                                                       Sample
         ...
Sample
                                                             Take Any Council                                      ...
Statement of Changes in Net Assets--Unrestricted
Transactions
Friends of Scouting      Total unrestricted contributions to...
Associated           Total amount of unrestricted associated organizations pledges (Gross Pledges).
   Organizations

   U...
Reclass Friends of       Dollars released from restrictions contributed to Friends of Scouting.
    Scouting

  Reclass Pr...
Charter and            Total of charter and national service fees paid to date.
 National Service
       Fee

  Total Expe...
Net Special           Gross temporarily restricted pledges minus provision for uncollectible.
Fundraising Events

    Lega...
Reclass Other         Dollars contributed to other indirect contributions, received with restrictions and
      Indirect  ...
Provision for         Total amount of other direct support not expected to be collected.
   Uncollectible
     Pledges

 N...
Total Reclass         Total of all net assets either released or having a change in restriction.

 Total Support and      ...
Analysis of the Statement of Changes in Net Assets
Analysis                 To understand this report, the reader needs to...
Statement of Cash Flows
Overview                 The Statement of Cash Flows is designed to show the reader the effect of ...
Statement of Cash Flows
                                                                   Sample
                        ...
Statement of Cash Flows
Increase/Decrease        This figure is taken from the Statement of Changes in Net Assets. This is...
Transfers           Increase or decrease in transfers since the first of January.

  Deferred Status        Increase or de...
Net               Total of the net cash flows from operations, investments, and borrowing.
Increase/Decrease
  in Cash Flo...
Statement of Functional Expenses
Overview             This report is one of four required reports for audits. It shows the...
Statement of Functional Expenses
                                                                       Sample
           ...
Interpreting Council Financial Statements
Interpreting Council Financial Statements
Interpreting Council Financial Statements
Interpreting Council Financial Statements
Interpreting Council Financial Statements
Interpreting Council Financial Statements
Interpreting Council Financial Statements
Interpreting Council Financial Statements
Interpreting Council Financial Statements
Interpreting Council Financial Statements
Interpreting Council Financial Statements
Interpreting Council Financial Statements
Interpreting Council Financial Statements
Interpreting Council Financial Statements
Interpreting Council Financial Statements
Interpreting Council Financial Statements
Interpreting Council Financial Statements
Interpreting Council Financial Statements
Interpreting Council Financial Statements
Interpreting Council Financial Statements
Interpreting Council Financial Statements
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Interpreting Council Financial Statements

  1. 1. Interpreting Council Financial Statements Boy Scouts of America
  2. 2. © 1997 Updated February 2001 Boy Scouts of America Irving, Texas 80-263
  3. 3. Table of Contents Introduction................................................................................................................................... 3 Background Information.............................................................................................................. 4 Statement of Financial Position.................................................................................................. 6 Statement of Changes in Net Assets ......................................................................................... 17 Statement of Cash Flows ........................................................................................................... 29 Statement of Functional Expenses............................................................................................ 34 Statement of Operations—Unrestricted................................................................................... 38 Financial Ratios.......................................................................................................................... 50 Appendix A: Restricted Fund Report ....................................................................................... 53 Appendix B: Reclassification Analysis Report........................................................................ 55 Interpreting Financial Statements Boy Scouts of America 1 Updated 2/2001
  4. 4. Interpreting Financial Statements Boy Scouts of America 2 Updated 2/2001
  5. 5. Introduction Background Most local Boy Scout councils produce the statements discussed in this guidebook to represent the financial standing of the council. The council then shares the statements with executive board members, major contributors including United Way organizations and foundations, and other interested parties. However, the financial statements of a not-for-profit organization differ from those of for-profit companies. These differences are created by the very nature of a not-for-profit business and the methods by which it accounts for contributions, donor-restricted gifts, gifts to endow the council’s operations and programs, deferred income from camps and activities, and other situations unique to not-for-profit operations. This guidebook will provide the reader with adequate information to interpret the Boy Scout council’s financial statements. Compliance The Financial Accounting Standards Board (FASB) recently set new accounting standards in an attempt to make all not-for-profit reporting more uniform. However, there are still some differences between other not-for-profit organizations and the Boy Scout councils based on options allowed by the accounting industry. Nevertheless, it is important to understand that the BSA accounting system is fully compliant with recent FASB standards. It is also compliant with the audit guides and accounting principles set by the American Institute of Certified Public Accountants (AICPA). Current For the past twenty years, the Local Council Accounting Manual has provided Resources guidance to council staffs, management, and volunteers in the area of proper accounting practices and procedures. However, the need exists to provide this concise training and communication resource to assist in successfully interpreting the council’s financial statements. How to Use This This guidebook is designed for individual study and as a training aid for classroom Guidebook groups. It can also be used as a reference guide for analyzing a current set of financial statements. It is designed to expand the knowledge of those who have a need to read the council’s financial statements. Note that your actual financial statements might not have all the line items included on the samples in this document. A line item will not be printed on the statement if there is no current-year, last-year, or budgeted figure for that item. Interpreting Financial Statements Boy Scouts of America 3 Updated 2/2001
  6. 6. Background Information Account In the council’s financial system, as in all accounting systems, every account is Categories classified as one of five categories of accounts. Every financial transaction of the council will be recorded in one or more of these categories: Assets are items of value that the organization owns, such as cash, receivables, inventory, or land. Liabilities are the claims against the organization, such as accounts payable and loans or mortgages. Net Assets are simply the amounts remaining when the liabilities are subtracted from the assets. They represent the organization’s retained earnings or equity. Income occurs when there is an increase in assets (such as cash) or a decrease in liabilities (such as a payable) with a simultaneous increase in the net assets. Income is segregated into Support (contributions) and Revenues (earned income). Expenses occur when there is a decrease in assets (such as cash) or an increase in liabilities (such as payables) with a simultaneous decrease in the net assets. Expenses can be expressed in either natural or functional categories. Accounting The accounting system relies on the interactions within these five categories of Formulas accounts. There are two mathematical formulas that define the accounting system and allow it to function. These formulas define the relationships within the five categories. The formulas are: Assets equal Liabilities plus Net Assets Income minus Expenses equals Change In Net Assets Fund Accounting The accounting system of the Boy Scouts of America uses three funds to segregate the financial activity of the council based on the specified purpose of the activity. This comes about because donors and governing boards request that certain amounts of money be used for specific purposes. The council has the responsibility to see that the money is spent accordingly, and in order to fulfill this stewardship function, unique funds are established to account for each specified amount of money or other asset. Each fund is an accounting entity complete with its share of assets, liabilities, and net assets. Revenues that are specified as belonging to the fund increase the net assets, while expenses incurred to accomplish the stated purpose of the fund decrease the net assets. The three funds are Operating, Capital, and Endowment. Descriptions of The Operating Fund accounts for all the council’s financial activity pertaining Funds to the annual operation and delivery of the Scouting program. All accounts that do not belong in either of the other two funds are included in the Operating fund. Interpreting Financial Statements Boy Scouts of America 4 Updated 2/2001
  7. 7. The Capital Fund accounts for all fixed assets that the council owns, the related liabilities, if any, and amounts designated or restricted for the purchase of fixed assets. Income and expenses related to fixed assets are also part of this fund. The Endowment Fund is used to account for investments designated by the board as endowment funds, or temporarily restricted by the donor to act as endowment funds, or permanently restricted by the donor as endowment funds. Interpreting Financial Statements Boy Scouts of America 5 Updated 2/2001
  8. 8. Statement of Financial Position Overview The Statement of Financial Position is a snapshot in time that tells the reader the financial condition of the council as of the date specified. It is a statement that covers the entire corporation, not just one aspect of it. The Statement also is the aggregate history of the council from its beginning to the current date of measurement. Assets and liabilities are stated by fund and total of all funds. Individual assets and liabilities are listed in order of their liquidity, the most liquid listed at the top and the least liquid at the bottom. Net assets are listed by type. There are three different types, including: § Unrestricted Funds – Funds over which the executive board has total discretion. § Temporarily Restricted Funds – Funds on which the donor has placed a time or purpose restriction. The executive board has no discretion over these funds. § Permanently Restricted Funds - Funds on which the donor has placed a permanent restriction. The executive board has no discretion over these funds. This report can be printed in summary or detail format. Interpreting Financial Statements Boy Scouts of America 6 Updated 2/2001
  9. 9. Statement of Financial Position SAMPLE Take Any Council Page 0001 Statement of Financial Position For the Period Ending 9/30/2000 Operating Fund Capital Fund Endowment Fund Total All Funds Assets 2000 1999 2000 1999 2000 1999 2000 1999 Current Assets Cash -223,471 -150,687 40,666 29,125 174,786 31,595 -8,020 -89,968 Short Term Investments 1,443 800 447 800 1,891 Accounts and Notes Receivable 129,666 131,594 129,666 131,594 Pledges Receivable 179,562 163,673 99,444 71,875 279,006 235,548 Inventories 219,468 155,527 219,468 155,527 Deferred Activity Expense 63,275 2,906 63,275 2,906 Deferred Special Events, Expens 2,317 2,596 2,317 2,596 Prepaid Expense 38,307 10,217 38,307 10,217 Total Current Assets 409,125 317,269 40,666 29,125 275,030 103,917 724,820 450,311 Land,Building, and Equipment 3,677,712 3,266,022 3,677,712 3,266,022 Long-Term Investments 6,154,960 5,846,931 6,154,960 5,846,931 Total Noncurrent Assets 3,677,712 3,266,022 6,154,960 5,846,931 9,832,672 9,112,953 Total Assets 409,125 317,269 3,718,377 3,295,147 6,429,990 5,950,848 10,557,492 9,563,264 Liabilities and Net Assets Current Liabilities Accounts Payable 35,264 68,948 3,663 -13 38,926 68,935 Accrued Expenses 6,925 6,049 6,925 6,049 Payroll Taxes Withheld 4,880 4,362 4,880 4,362 Custodial Accounts 83,089 72,045 83,089 72,045 Notes Payable 124,000 97,200 124,000 97,200 Deferred Activity Income 32,210 5,577 32,210 5,577 Deferred Camp Income 4,490 2,450 4,490 2,450 Deferred Special Events Income 78,713 -17,576 78,713 -17,576 Other Current Liabilities 10,132 7,149 1,016 11,148 7,149 Total Current Liabilities 255,702 149,004 4,678 -13 124,000 97,200 384,381 246,191 Long-Term Indebtedness 100,611 89,342 100,611 89,342 Total Noncurrent Liabilities 100,611 89,342 100,611 89,342 Total Liabilities 255,702 149,004 105,289 89,329 124,000 97,200 484,992 335,533 Net Assets Unrestricted Net Assets 154,327 169,170 3,453,125 3,046,455 2,809,217 2,833,268 6,416,670 6,048,893 Temp. Restricted Net Assets -905 -905 159,963 159,363 2,000 2,000 161,058 160,458 Perm. Restricted Net Assets 3,494,773 3,018,380 3,494,773 3,018,380 Total Net Assets 153,422 168,265 3,613,088 3,205,818 6,305,990 5,853,648 10,072,501 9,227,731 Total Liabilities and Net Assets 409,124 317,269 3,718,377 3,295,147 6,429,990 5,950,848 10,557,493 9,563,264 -- End of report -- Interpreting Financial Statements Boy Scouts of America 7 Updated 2/2001
  10. 10. Statement of Financial Position—Assets Current Assets This is the first category listed on the statement. These are council assets that are considered accessible to the council during the current fiscal year. Because these assets are sequenced in their nearness to cash, this is the first place to look for available cash or the possibility of “freeing up” cash. Cash Not only is this cash in the checking account, but it also may include cash in savings accounts, petty cash funds, and change funds. Short-Term These are current funds that have been invested in short-term vehicles like Investments certificates of deposit, and are available with little notice. Accounts Receivable These are receivables that the council has recorded; they may include grants, accrued income from investments, accrued gains (or losses), and miscellaneous receivables, such as returned checks or deposits. Pledges Receivable These are receivables from all of the fundraising campaigns that the council holds less an allowance for uncollectible pledges. This amount may include pledges yet unpaid from previous campaigns or from future campaigns. It will also include pledges receivable from United Ways, special events, grants, and other contributions as well as Friends of Scouting. Inventories This is the value, at cost, of the inventories held by the council. These may be inventories held for sale at the Council Service Center, camp trading post, product sales, food and other commissary supplies at camp, and/or donated goods and services held for resale such as auction items. lnterfund Loans These are the loans from one fund to another fund. These may include temporary loans where an item was purchased from one fund for another fund and the transfer has not been recorded yet. vRule: The “Total All Funds” column for this category must be blank or zero. If there is an amount in this column for interfund loans, then the interfund loans are out of balance. Usually this happens because only half of the transaction has been recorded, for example, funds have been borrowed from fund 1 but have not been loaned to either fund 2 or 3. Deferred Expenses These are purchases (usually supplies or contracts) for activities, camps, or special events to be held at some future time. Until the activities, camps, or special events are actually held, these purchases are assets belonging to the council. When the event is held, the purchases will become nondeferred expenses of that event. See Deferred Income in the Liabilities section. Deferred Activity These are all prepaid expenses for activities. As the activity is completed, Expenses balances are moved to the appropriate expense lines on the Statement of Operations. Interpreting Financial Statements Boy Scouts of America 8 Updated 2/2001
  11. 11. Deferred Camp These are all prepaid expenses for camps. As the camp is completed, balances Expenses are moved to the appropriate expense lines on the Statement of Operations. Deferred Special These are all prepaid expenses for special events. As the special event is Events Expenses completed, the balances are moved to the appropriate expense lines on the Statement of Operations. Prepaid Expenses These accounts record the value of funds that have been expended to prepay future expenses. This may include insurance premiums that have been paid on an annual basis but retain value as an asset for the months remaining in the premium year. The council could cancel the insurance policy and receive the outstanding month’s premiums; therefore, these premiums are an asset of the council. Other examples of prepaid expenses are fundraising expenses, rent, taxes, maintenance or service contracts, and nonsalable inventory, such as office supplies. Total Current Assets This is the total of all asset categories listed above. Noncurrent Assets These are assets that have an extended life and include land, buildings, equipment, and long-term investments. Land, Building, and This is the value of land, buildings, and equipment recorded at either purchase Equipment price or fair market value when received less the accumulated depreciation for buildings and equipment. This means that the asset is recorded, when acquired, at a determined fair market value and, except for land, an estimate of the years of useful life is established. For example, a computer may be three years; a vehicle, five years; a building, fifty years. Each year, the value of the asset is reduced by an equal portion of its estimated life. For example, the value of a computer is reduced by one-third each year. At the end of its useful life, the asset is fully depreciated and has no recorded value as an asset of the corporation. Councils use straight-line depreciation. vRule: Councils should adopt a “Capitalization Policy” to set the value for a newly acquired asset by either, 1) giving it a life of one year or less and fully expensing it in that fiscal year, or 2) giving it a life of two years or more and capitalizing it as an asset of the corporation depreciated (expensed) over its useful lifetime. Long-Term These are the assets of the council that have been invested in long-term Investments investment vehicles or fixed assets held for resale. This includes the endowment investments of the council. Total Noncurrent This is the total of the two noncurrent items above. Assets Total Assets This is the total of both current and noncurrent assets. Interpreting Financial Statements Boy Scouts of America 9 Updated 2/2001
  12. 12. Statement of Financial Position—Liabilities Current Liabilities These are those short-term claims on the council resulting from annual operations. Accounts Payable This is the amount due and payable to all suppliers and vendors. The Accounts Payable Aging Report will provide information about when these payables are due. Accrued Expenses These accounts record, as a liability, expenses incurred and unpaid, for which invoices were not received by the close of an accounting period. Because invoices were not received, the expenses can not be listed as accounts payables; however, the estimated expense should be accrued. This may include accrued insurance premiums, interest, rent, taxes, payroll, vacation pay, or professional fees. Payroll Taxes This includes all payroll taxes and benefit withholdings collected from Withheld employees but not paid. This also includes the council’s share of payroll taxes expensed but unpaid. Custodial Accounts These accounts include the amount of funds held in custody for an entity other than the council. This includes registration and Boys’ Life fees collected and unpaid to the national council and funds held on deposit for units, Order of the Arrow, and National Eagle Scout Association. These funds are held in custody and should not be expended for operating purposes. Notes Payable This is for short-term notes, such as a line of credit or cash flow loan. This should also include this year’s portion of long-term notes payable, such as mortgages. Interpreting Financial Statements Boy Scouts of America 10 Updated 2/2001
  13. 13. Statement of Financial Position—Deferred Income and Noncurrent Liabilities Deferred Income These include participation fees for activities, camps, or special events that will be held at some future time. Until the activities, camps, or special events are actually held, this income is considered liability, because it is refundable to the participant if the council fails to produce the event. When the event is held, the fees become nondeferred and are income for that event. Deferred Activity These are all fees paid for participation in activities. As the activity is Income completed, the balances are moved to the appropriate income lines on the Statement of Operations. Deferred Camp These are all fees paid for participation in camps. As the camp is completed, Income the balances are moved to the appropriate income lines on the Statement of Operations. Deferred Special This is all income and direct benefit expenses for special events. As the Events Income special event is completed, the balances are moved to the appropriate income lines on the Statement of Operations. Other Current This is a collection of items that do not appropriately fit into one of the Liabilities above categories but are current liabilities. They include sales and use tax payables, funds of inactive units, unclaimed wages, garnishments and child support payments collected but unpaid, Scout bucks or gift certificates issued but unclaimed, and other current liabilities. Total Current This is the total of the current liabilities listed above. Liabilities Noncurrent Liabilities These are liabilities that extend beyond the current fiscal year. Long-Term This is the portion of long-term notes payable or mortgages that extend Indebtedness beyond this current fiscal year. This year’s portion would be found in the Notes Payable section. Other Noncurrent This is for long-term indebtedness other than notes or mortgages, such as Liabilities capital lease obligations that extend beyond the current fiscal year. Total Noncurrent The total of the noncurrent liability categories listed above. Liabilities Total Liabilities This is the total of both current and noncurrent liabilities. Interpreting Financial Statements Boy Scouts of America 11 Updated 2/2001
  14. 14. Statement of Financial Position—Net Assets Net Assets These are segregated based on restrictions that have been placed on contributions or revenue by the original donor. Restrictions can not be placed on the net assets by any other entity, including the executive board, with the one rare exception of state law. Many states have adopted the Uniform Management of Institutional Funds Act (UMJFA), which allows and/or requires organizations to spend and/or retain unrestricted appreciation from permanently restricted endowment gifts. Donor restrictions that have a time or purpose limitation are called temporary restrictions. Donor restrictions that the executive board can never change are called permanent restrictions. All net assets of the council that do not carry a donor’s temporary or permanent restriction are called unrestricted. Unrestricted Net Unrestricted net assets represent the net worth of the council free of any Assets donor-imposed restrictions. In the Operating fund, this is the net worth of unrestricted operations. In the Capital fund, this is usually the value of depreciated fixed assets less any liabilities against those fixed assets and/or any unrestricted or board- designated funds available for the purpose of purchasing fixed assets. In the Endowment fund, this is usually the value of unrestricted or board- designated funds “acting as endowment” less any liabilities. These could be original gifts, appreciation, or interest/dividend income transferred back to the Endowment fund from the Operating fund. Although these funds may be unrestricted, they may be invested with a trustee using a trust agreement that does not allow the executive board to access these funds. Temporarily This represents the net worth of the council that has a donor’s restriction on Restricted Net Assets the original gift, or use of apprecia tion, or interest/dividends. The restrictions can be met by either the passage of time or the occurrence of a specific event. In the Operating fund, this is usually time-restricted contributions (FOS or United Way for next year) or purpose-restricted contributions and revenue (appreciation, interest/dividends). In the Capital fund, this is usually unexpended funds raised through a capital campaign and, therefore, restricted for the purpose of the campaign. Once the funds are used to complete the construction or to acquire the fixed assets, the funds become unrestricted investments in fixed assets. In the Endowment fund, the donor has restricted the use of the funds, and until such time as the restriction is met, the funds are to function as endowment funds. This may include original gifts, appreciation, or interest/dividends. Interpreting Financial Statements Boy Scouts of America 12 Updated 2/2001
  15. 15. Statement of Financial Position—Net Assets Permanently This represents the net worth of the council that has a donor’s restriction on Restricted Net Assets the original gift and use of appreciation or interest/dividends that the executive board can never remove. In the Operating fund, this net asset is not available. Because the council has other funds in which to record endowment gifts, there is no use for this net asset in the Operating fund. In the Capital fund, this net asset is used to record fixed assets that are permanently restricted by the donor. This would be only fixed assets and not unexpended funds because those funds would be recorded in the Endowment fund. In the Endowment fund, this net asset represents the true endowment of the council, those funds permanently restricted by the donor as endowment funds. This may include original gifts and appreciation or interest/dividends that carry a specific donor restriction. Total Net Assets This is the total of the unrestricted, temporarily restricted, and permanently restricted net assets and represents the total net worth of the council as defined by the mathematical formula: Total Assets less Total Liabilities equals Total Net Assets. Total Liabilities and This is the sum of total liabilities and total net assets. Net Assets vRule: The Statement of Financial Position is sometimes called a Balance Sheet. The reason is that the two lines, Total Assets and Total Liabilities and Net Assets , must always be equal or balance each other. If the two lines are not the same, then the statement is out of balance. (Rounding computations may cause the lines to be off by one or two dollars, which is not enough to declare the statement out of balance.) Interpreting Financial Statements Boy Scouts of America 13 Updated 2/2001
  16. 16. Liquidity Ratio—Unrestricted Operating Fund Liquidity Ratio (30-Day Demand) ØNote: The liquidity ratio may or may not be included in a Statement of Financial Position. National Formula This line represents the nationally suggested ratio of cash assets to thirty-day or less demand liabilities. National Standard in This line figures the cash items using the suggested ratio and the council’s Dollars actual thirty-day or less demand liabilities. Council in Dollars This line figures the cash assets using the actual thirty-day or less demand liabilities. Council Cash Ratio This line figures the council’s actual ratio for cash assets to within thirty days. Interpreting Financial Statements Boy Scouts of America 14 Updated 2/2001
  17. 17. Analysis of the Statement of Financial Position Is Your Statement Remember that this statement is a presentation of the mathematical equation in Balance? Total Assets equals Total Liabilities plus Net Assets. Therefore, the Total Assets line must equal the Total Liabilities and Net Assets line. If these two lines do not show the same number in each column, then your statement is out of balance. ØNote: Because of the way the numbers are summarized for the statement, there may be a difference of a couple dollars due to rounding. This does not mean that you are out of balance. lnterfund Loans An interfund loan is a loan of money from one fund to a second fund. In order to appropriately record an interfund loan, the fund that borrowed the money will have a negative asset equal to the loan amount and the fund that loaned the money will have a positive asset of the same amount. The net result in the Total All Funds column must always be zero (or a blank space). A quick check of the Total All Funds column will tell you if your interfund loans are in balance. Is it blank? Negative Numbers Except for the Interfund Loan line, there should be no negative numbers in the Assets and Liabilities sections. A negative asset is by definition a liability and a negative liability is an asset. If one or more of the funds of the council is financially bankrupt, there may be a negative number in the Unrestricted Net Assets line. This of course should be a major concern to the council. The only time a negative number would appear in the Temporarily Restricted Net Asset line is when losses have been recorded for a restricted investment; otherwise both the Temporarily and Permanently Restricted Net Asset lines should always be positive numbers. Cash and Short- A quick review of lines 1 and 2 on the statement will give you an idea of the Term Investments availability of cash and short-term investments. Ask these questions: Is there enough cash? Is there too much cash in the checking account? Does the cash amount exceed the FDIC insurance level? Should some of the cash in the checking account be moved to short-term investments for a better return on the money? Is the cash appropriately distributed among the funds? Are there enough short-term investments? Should some of the investments be moved to the checking account? Are there short-term investments that should be moved to long-term investments? Review Current Do the amounts in the Current Assets categories and the Current Liabilities Assets and Current categories make sense, and can you explain what they are? Liabilities If you have questions as to what makes up a particular amount, print a Detailed Statement of Financial Position for the fund in question. It will list each account included in the summary statement line. Interpreting Financial Statements Boy Scouts of America 15 Updated 2/2001
  18. 18. Use of Correct Land, building, and equipment items should all be in the Capital fund (fund Funds 2) along with any associated long-term indebtedness on the assets. Long-term investments should usually be in the Endowment fund (fund 3). Review the Net Unrestricted net assets can be in any and all three funds. These amounts are Assets available to the board to be transferred between funds as the executive board designates. This requires board action and is recorded in the minutes of the executive board meeting. ØNote: Even though there are unrestricted net assets in the Endowment fund, they may not be available for transfer, because they have been placed in a trust that the executive board cannot access. Temporarily restricted net assets can also be found in any or all three funds. If it is unclear why these amounts are restricted, the council can print a Restricted Funds Report for one or all funds. This detailed report is printed by cost center for temporarily restricted net assets. (An example of this report is in Appendix A.) Permanently restricted net assets should never be in the Operating fund (fund 1), and rarely in the capital fund (fund 2). In fund 2, permanent restrictions on fixed assets are usually land assets that cannot be sold. The Endowment fund (fund 3) represents the council’s “true” endowment with donor restricted as part of the endowment gift. Compare This Year Compare each line amount with the amount from last year at the same time. with Last Year If they differ significantly, determine the reason for the difference. For example, if inventory has increased by $14,788 or 27 percent, ask why. Has the council done something different this year that would explain the increase? Liquidity Ratio The liquidity ratio at the bottom of the Statement of Financial Position indicates the council’s ability to pay current on-demand obligations when they are due. To determine the liquidity ratio for the Operating fund, take the liquid assets (Cash and Short-Term Investments) and subtract the on-demand liabilities (Accounts Payable, Accrued Expenses, Payroll Taxes Withheld, and Custodial Accounts); then divide the result by those same on-demand liabilities. The national standard or recommended point to achieve is .33. The national average for 1999 was .37. If your council’s ratio is too high, you may be able to make better use of your available cash. Perhaps you should consider longer term investing. Your council’s ratio may be too low and as the number decreases, there is a greater need to decide which vendors to pay each month. A figure less than zero means there are not enough liquid assets to cover short-term liabilities. Consider withdrawing long-term investments or securing a cash flow loan from the bank. Interpreting Financial Statements Boy Scouts of America 16 Updated 2/2001
  19. 19. Statement of Changes in Net Assets Overview This statement (often called Statement of Activities) is designed to show the reader the total income and expense for all funds and for all fund restrictions. It is an accurate representation of what the total corporation has accomplished for the specified period. In addition to showing income and expense, it also shows the type of income, with unrestricted, temporarily restricted, and permanently restricted contributions, and net assets that flow from those contributions. The report shows comparative data by year and by fund. The comparison is with the same month, one year earlier, from the specified date of the statement. The second purpose of the report is to show what changes in net assets have occurred and the source of that change since the beginning of the year being measured. The report shows the net assets as of the beginning of the year and any changes to net assets, as well as transfers, that have occurred during the period being measured. Ending net assets on this report are the same net assets reported on the Statement of Financial Position. The increase or decrease of net assets for all funds is the beginning point for the Statement of Cash Flows. This report can be printed in natural expense order or functional expense order. Interpreting Financial Statements Boy Scouts of America 17 Updated 2/2001
  20. 20. Statement of Changes in Net Assets Sample Take Any Council Page 0001 Statement of Changes in Net Assets For the Period Ending 9/30/2000 Functional Presentation Changes in Unrestricted Net Assets Operating Fund Capital Fund Endowment Fund Total All Funds Support and Revenue 2000 1999 2000 1999 2000 1999 2000 1999 Friends of Scouting - Gross 716,965 691,675 716,965 691,675 Less Provision for Uncollectible -45,502 -23,246 -45,502 -23,246 Net Friends of Scouting 671,463 668,429 671,463 668,429 Special Events - Gross 33,705 66,375 33,705 66,375 Less Cost of Direct Benefit -7,759 -4,082 -7,759 -4,082 Net Special Events 25,945 62,293 25,945 62,293 Foundations and Trusts 9,322 9,322 Total Direct Support 706,730 730,722 706,730 730,722 Indirect Support United Ways 73,037 70,206 73,037 70,206 Total Indirect Support 73,037 70,206 73,037 70,206 Revenue Sale of Supplies - Gross 533,399 494,984 533,399 494,984 Less Cost of Goods Sold -387,707 -362,511 -387,707 -362,511 Net Sale of Supplies 145,693 132,473 145,693 132,473 Product Sales - Gross 7,570 7,510 7,570 7,510 Less Cost of Goods Sold -209 -209 Net Product Sales 7,570 7,301 7,570 7,301 Investment Income 280,214 196,525 86,850 109,789 -262,689 -223,392 104,375 82,923 Gain or Loss on Investments 19,279 228,402 19,279 228,402 Camping Revenue 595,183 609,070 60 595,183 609,130 Activity Revenue 164,352 160,786 164,352 160,786 Other Revenue 22,390 28,176 46,680 43,686 69,071 71,862 Total Revenue 1,215,402 1,134,331 133,530 153,475 -243,410 5,070 1,105,522 1,292,876 Net Assets Released Frm Restrictions Reclass Friends of Scouting 17,569 14,716 17,569 14,716 Reclass Capital Campaign 7,550 7,550 Reclass Foundations 50,000 50,000 Reclass Other Direct 9,196 9,196 Reclass United Way 50 50 Total Reclassification of Net Assets 26,765 64,766 7,550 34,315 64,766 Total Support and Revenue 2,021,935 2,000,025 141,080 153,475 -243,410 5,070 1,919,605 2,158,570 Expenses Program Services 1,650,971 1,562,065 157,690 131,159 4,896 4,577 1,813,557 1,697,802 Support Services Management and General 80,420 81,632 4,875 4,300 282 263 85,577 86,195 Fundraising 140,601 126,464 9,751 8,599 564 527 150,916 135,590 Total Supporting Services 221,020 208,096 14,626 12,899 847 790 236,493 221,784 Charter and National Service Fee 20,876 18,247 20,876 18,247 Total Expenses 1,892,867 1,788,408 172,316 144,058 5,742 5,367 2,070,925 1,937,833 Inc (Dec) in Unrestricted Net Assets 129,068 211,618 -31,236 9,417 -249,152 -297 -151,320 220,737 Interpreting Financial Statements Boy Scouts of America 18 Updated 2/2001
  21. 21. Sample Take Any Council Page 0002 Statement of Changes in Net Assets For the Period Ending 9/30/2000 Functional Presentation Changes in Temporarily Restricted Net Assets Direct Support Capital Campaign 600 600 Total Direct Support 600 600 Indirect Support Total Indirect Support Revenue Total Revenue Net Assets Released Frm Restrictions Reclass Friends of Scouting -17,569 -14,716 -17,569 -14,716 Reclass Capital Campaign -7,550 -7,550 Reclass Foundations -50,000 -50,000 Reclass Other Direct -9,196 -9,196 Reclass United Way -50 -50 Total Reclassification of Net Assets -26,765 -64,766 -7,550 -34,315 -64,766 Total Support and Revenue -26,765 -64,766 -6,950 -33,715 -64,766 Inc (Dec) in Temp. Res. Net Assets -26,765 -64,766 -6,950 -33,715 -64,766 Changes in Permanently Restricted Net Assets Direct Support Legacies and Bequests 18,028 18,028 Foundations and Trusts 59 59 Other Direct Support 220,521 134,034 220,521 134,034 Total Direct Support 220,580 152,062 220,580 152,062 Indirect Support Total Indirect Support Revenue Total Revenue Net Assets Released Frm Restrictions Total Reclassification of Net Assets Total Support and Revenue 220,580 152,062 220,580 152,062 Inc (Dec) in Perm. Res. Net Assets 220,580 152,062 220,580 152,062 Inc (Dec) in Total Net Assets 102,303 146,852 -38,186 9,417 -28,572 151,765 35,545 308,033 Net Assets, Beg. of Year Unrestricted Net Assets 25,260 -42,447 3,484,361 3,038,819 3,058,370 2,833,565 6,567,990 5,829,936 Temporarily Restricted Net Assets 25,860 66,776 166,913 159,363 2,000 2,000 194,772 228,138 Permanently Restricted Net Assets 3,274,193 2,866,318 3,274,193 2,866,318 Total Net Assets, Beg. of Year 51,119 24,328 3,651,274 3,198,181 6,334,563 5,701,883 10,036,956 8,924,392 Adjustments to Net Assets Unrestricted Adjustments -1,780 -1,780 Temporarily Restricted Adjustments -2,914 -2,914 Permanently Restricted Adjustments Total Adjustments to Net Assets -2,914 -1,780 -4,694 Net Assets, End of Period Unrestricted Net Assets 154,328 169,171 3,453,125 3,046,456 2,809,218 2,833,268 6,416,670 6,048,894 Temporarily Restricted Net Assets -905 -905 159,963 159,363 2,000 2,000 161,057 160,458 Permanently Restricted Net Assets 3,494,773 3,018,380 3,494,773 3,018,380 Total Net Assets, End of Period 153,422 168,266 3,613,088 3,205,818 6,305,991 5,853,648 10,072,501 9,227,732 -- End of report -- Interpreting Financial Statements Boy Scouts of America 19 Updated 2/2001
  22. 22. Statement of Changes in Net Assets--Unrestricted Transactions Friends of Scouting Total unrestricted contributions to the Friends of Scouting campaign (gross pledges). Provision for Total amount of Friends of Scouting pledges not expected to be collected. Uncollectible Pledges Net Friends of Gross unrestricted pledges minus provision for uncollectible. This includes Scouting Friends of Scouting prior year and direct-mail contributions. Project Sales Total unrestricted contributions to Project Sales Campaign (gross pledges). This includes project sales for a prior year. Provision for Total amount of Project Sales pledges not expected to be collected. Uncollectible Pledges Net Project Sales Gross unrestricted pledges minus provision for uncollectible. Capital Campaign Total unrestricted contributions (Gross Pledges). Provision for Total amount of Capital Campaign pledges not expected to be collected. Uncollectible Pledges Net Capital Gross unrestricted pledges minus provision for uncollectible. Campaign Special Fundraising Total unrestricted contributions to Special Fundraising Events (Gross Pledges) Events Provision for Total amount of Special Fundraising Event pledges not expected to be collected. Uncollectible Pledges Special Fundraising Gross unrestricted pledges minus provision for uncollectible. Event Legacies & Total amount of unrestricted legacies and bequest pledges (Gross Pledges). Bequest Foundations and Total amount of unrestricted foundations and trusts pledges (Gross Pledges). Trusts Other Direct Total amount of unrestricted other direct support pledges (Gross Pledges). Support Total Direct Total of Friends of Scouting, project sales, capital campaign, special fundraising Support events, foundations and trusts, and other direct support. Interpreting Financial Statements Boy Scouts of America 20 Updated 2/2001
  23. 23. Associated Total amount of unrestricted associated organizations pledges (Gross Pledges). Organizations United Ways Total unrestricted contributions from United Ways (Gross Pledges). Provision for Total amount of United Way pledges not expected to be collected. Uncollectible Pledges Net United Ways Gross unrestricted pledges minus provision for uncollectible. Other Indirect Total amount of other indirect support pledges (Gross Pledges). Support Fees and Grants Total amount of fees and grants from government agencies (Gross Revenues). from Government Agencies Total Indirect Total of associated organizations, United Ways, other indirect support, and fees Support and grants from government agencies. Sales of Supplies Total sales from in house store shop. Cost of Goods Sold Cost of items sold. Net Sale of Total sales minus cost of goods sold. Supplies Product Sales The gross amount of products sold. Cost of Goods Sold Cost of product being sold. Commissions Paid Amount of money earned by units in selling the products. to Units Net Product Sales Total sales minus cost of goods sold and commissions paid to units. Investment Income Total investment earnings by all funds for unrestricted purposes. Gain or Loss on Unrestricted gains or losses on invested funds for all funds. Investments Camping Revenue Gross camp fees minus cost of goods sold in the trading post operation. Activity Revenue Gross activity fees minus commissions paid to units and cost of goods sold in the trading post operation. Other Revenue Gross revenue from other sources. Total Revenue Total unrestricted revenue from sales of supplies, product sales, investment income, gain or loss on investments, camping revenues, activity revenue and other revenue. Interpreting Financial Statements Boy Scouts of America 21 Updated 2/2001
  24. 24. Reclass Friends of Dollars released from restrictions contributed to Friends of Scouting. Scouting Reclass Project Dollars released from restrictions contributed to project sales. Sales Reclass Capital Dollars released from restrictions contributed to capital campaign. Campaign Reclass Special Dollars released from restrictions contributed to special fundraising events. Fundraising Events Reclass Dollars released from restrictions contributed by foundations and trusts. Foundations and Trusts Reclass Other Dollars released from restrictions contributed to other direct revenue. Direct Revenue Reclass United Dollars released from restrictions contributed by United Ways. Ways Reclass Other Dollars released from restrictions contributed to other indirect contributions. Indirect Contributions Reclass Fees and Dollars released from restrictions contributed by fees and government grants. Government Grants Reclass Realized Dollars released from restrictions for realized appreciation. Appreciation Reclass Donor Dollars released from restrictions for donor designated United Way Designated United contributions. Way Contributions Total Total reclassifications released from restrictions. Reclassifications of Net Assets Total Support and Total of direct support, indirect support, revenue and reclassifications released Revenue from restrictions. Program Services Total expenses that are related to providing program services to the council. Management Total expenses that are related to management of the council. Services Fundraising Total expenses that are related to raising money for the council. Total Support Total of management and fundraising expenses. Services Interpreting Financial Statements Boy Scouts of America 22 Updated 2/2001
  25. 25. Charter and Total of charter and national service fees paid to date. National Service Fee Total Expenses Total of program services, management services, fundraising expenses and charter and national service fee. Increase (Decrease) Difference between total support and revenue and total expenses. in Unrestricted Net Assets Statement of Changes in Net Assets—Temporarily Restricted Transactions Friends of Scouting Total temporarily restricted contributions to Friends of Scouting campaign (gross pledges). This includes Friends of Scouting prior year and direct-mail contributions. Provision for Total amount of Friends of Scouting pledges not expected to be collected. Uncollectible Pledges Net Friends of Gross temporarily restricted pledges minus provision for uncollectible. Scouting Project Sales Total temporarily restricted contributions to project sales campaign (gross pledges). This includes Project Sales for a prior year. Provision for Total amount of project sales pledges not expected to be collected. Uncollectible Pledges Net Project Sales Gross temporarily restricted pledges minus provision for uncollectible. Capital Campaign Total temporarily restricted contributions (Gross Pledges). Provision for Total amount of capital campaign pledges not expected to be collected. Uncollectible Pledges Net Capital Gross temporarily restricted pledges minus provision for uncollectible. Campaign Special Fundraising Total temporarily restricted contributions from special fundraising events (Gross Events Pledges). Provision for Total amount of special fundraising event pledges not expected to be collected. Uncollectible Pledges Interpreting Financial Statements Boy Scouts of America 23 Updated 2/2001
  26. 26. Net Special Gross temporarily restricted pledges minus provision for uncollectible. Fundraising Events Legacies & Total amount of temporarily restricted legacies and bequest pledges (gross Bequest pledges). Foundations and Total amount of temporarily restricted foundations and trusts pledges (gross Trusts pledges). Other Direct Total amount of temporarily restricted other direct support pledges (gross Support pledges). Total Direct Total of temporarily restricted Friends of Scouting, project sales, capital Support campaign, special fundraising events, foundations and trusts and other direct support. United Ways Total temporarily restricted contributions from United Ways (gross pledges). Provision for Total amount of United Way pledges not expected to be collected. Uncollectible Pledges Net United Ways Gross temporarily restricted pledges minus provision for uncollectible. Other Indirect Total amount of temporarily restricted other indirect support pledges (gross Support pledges). Fees and Grants Total amount of temporarily restricted fees and grants from government from Government agencies (gross revenues). Agencies Total Indirect Total of temporarily restricted United Ways, other indirect support, and fees and Support grants from government agencies. Reclass Friends of Dollars contributed to Friends of Scouting, received with restrictions and now Scouting released from restrictions. Reclass Project Dollars contributed to project sales, received with restrictions and now released Sales from restrictions Reclass Capital Dollars contributed to Capital Campaign, received with restrictions and now Campaign released from restrictions. Reclass Special Dollars contributed to special fundraising events, received with restrictions and Fundraising Events now released from restrictions. Reclass Foun- Dollars contributed to foundations and trusts, received with restrictions and now dations and Trusts released from restrictions. Reclass Other Dollars contributed to other direct revenue, received with restrictions and now Direct Revenue released from restrictions Reclass United Dollars contributed to United Ways, received with restrictions and now released Ways from restrictions. Interpreting Financial Statements Boy Scouts of America 24 Updated 2/2001
  27. 27. Reclass Other Dollars contributed to other indirect contributions, received with restrictions and Indirect now released from restrictions. Contributions Reclass Fees and Dollars contributed to fees and government grants, received with restrictions and Government Grants now released from restrictions. Reclass Realized Dollars for realized appreciation, received with restrictions and now released Appreciation from restrictions. Reclass Donor Dollars for donor designated United Way contributions, received with Designated United restrictions and now released from restrictions. Way Contributions Total Total temporarily restricted net assets released from restrictions. Reclassifications of Net Assets Total Support and Total of temporarily restric ted contributions received, temporarily restricted Revenue revenue received and temporarily restricted net assets released from restrictions. Statement of Changes in Net Assets—Permanently Restricted Transactions Capital Campaign Total permanently restricted contributions (Gross Pledges). Special Fundraising Total permanently restricted contributions from special fundraising events Events (Gross Pledges). Provision for Total amount of special fundraising event pledges not expected to be collected. Uncollectible Pledges Net Special Gross permanently restricted pledges minus provision for uncollectible. Fundraising Events Legacies & Total amount of permanently restricted legacies and bequest pledges (Gross Bequest Pledges). Provision for Total amount of legacies and bequest pledges not expected to be collected. Uncollectible Pledges Net Legacies & Gross permanently restricted pledges minus provision for uncollectible Bequests Foundations and Total amount of permanently restricted foundations and trusts pledges (Gross Trusts Pledges). Other Direct Total amount of permanently restricted other direct support pledges (Gross Support Pledges). Interpreting Financial Statements Boy Scouts of America 25 Updated 2/2001
  28. 28. Provision for Total amount of other direct support not expected to be collected. Uncollectible Pledges Net Other Direct Gross permanently restricted pledges minus provision for uncollectible Support James E West Total amount of permanently restricted James E West Fellowship contributions (Gross Pledges). Provision for Total amount of James E West Fellowship pledges not expected to be collected. Uncollectible Pledges Net James E West Gross permanently restricted pledges minus provision for uncollectible 1910 Society Total of permanently restricted 1910 Society contributions (Gross Pledges). Provision for Total amount of 1910 Society pledges not expected to be collected. Uncollectible Pledges Net 1910 Society Gross permanently restricted pledges minus provision for uncollectible Total Direct The total of all direct support contributions. Support Other Indirect The total amount of permanently restricted other indirect income. Income Total Indirect The total of all permanently restricted indirect support contributions. Support Investment Income The total investment income permanently restricted. Investment Income The total royalties permanently restricted. – Royalties Gain or Loss on The total permanently restricted gains or losses. Investment Total Unrealized The total permanently restricted unrealized gains or losses. Gains or Losses Total all Revenues The total of all revenues that are permanently restricted. – Perm. Restric ted Reclass Perm. The total of net assets released from restriction. Restricted Net Assets Reclass Perm. Total of appreciation released from restriction. Restricted Appreciation Interpreting Financial Statements Boy Scouts of America 26 Updated 2/2001
  29. 29. Total Reclass Total of all net assets either released or having a change in restriction. Total Support and Total of contributions, direct and indirect, revenue and reclassification of net Revenue assets released from restriction. Total Total increase or decrease of permanently restricted net assets. Statement of Changes in Net Assets—Beginning and Ending Balances Total Increase or This is the sum total of changes to unrestricted, temporarily and permanently Decrease of Total restricted net assets. Net Assets Unrestric ted Net Total of unrestricted net assets at the beginning of the fiscal year for each fund Assets and total for all funds. Temporarily Total of temporarily restricted net assets at the beginning of the fiscal year for Restricted Net each fund and total for all funds. Assets Permanently Total of permanently restricted net assets at the beginning of the fiscal year for Restricted Net each fund and total for all funds. Assets Total Net Assets, Total of unrestricted, temporarily and permanently restricted net assets at the Beginning of Year beginning of the fiscal year. Transfers Permanent movement of assets between funds. (All assets are counted as unrestricted transactions.) Adjustments to Net These are adjustments to net assets for: Assets § all unrestricted net assets. § all temporarily restricted net assets. § all permanently restricted net assets. Total Adjustments This is the total of unrestricted, temporarily and permanently restricted to Net Assets adjustments to net assets. Unrestricted Net Total of unrestricted net assets at the end of the fiscal period for each fund and Assets total for all funds. Temporarily Total of temporarily restricted net assets at the end of the fiscal period for each Restricted Net fund and total for all funds. Assets Permanently Total of permanently restricted net assets at the end of the fiscal period for each Restricted Net fund and total for all funds. Assets Interpreting Financial Statements Boy Scouts of America 27 Updated 2/2001
  30. 30. Analysis of the Statement of Changes in Net Assets Analysis To understand this report, the reader needs to identify four separate sections of the report. • Net Assets—These are at the bottom of the report. This section shows the balance that existed at the beginning of the year and the balance at the end of the year. The next three sections are an explanation of why these changes have occurred. • Unrestricted Transactions—All income, expense, and reclassification of net assets that are unrestricted are shown on this part of the statement. • Temporarily Restricted Transactions—These are income and reclassification of net assets that are temporarily restricted. • Permanently Restricted Transactions—These are income and reclassification of net assets that are permanently restricted. Unrestricted The income is stated along with reclassifications. Expenses may be stated as Transactions natural items (salary, benefits, payroll taxes, etc.) or as functional expense (program, management, and fundraising). By definition, unrestricted funds are the only ones that contain expenses. Temporarily Income is divided between contribution income and revenue and reclassification Restricted of net assets. There are no expenses. See the explanation above. Transactions Permanently Income is divided between contribution income and revenue and reclassification Restricted of net assets. There are no expenses. Transactions Increase/ This is the total of all three sections and the beginning point for the Statement of Decrease in Total Cash Flows. Net Assets Beginning and Beginning is the amount of net assets at the start of the fiscal period. Two other Ending Net Assets items appear between the beginning net assets and ending net assets. These items are transfers between funds and adjustments to net assets. These three items together will make up the ending net asset balance. Interpreting Financial Statements Boy Scouts of America 28 Updated 2/2001
  31. 31. Statement of Cash Flows Overview The Statement of Cash Flows is designed to show the reader the effect of all transactions on cash. The beginning point for this statement is the net increase (decrease) in net assets as shown on the Statement of Change in Net Assets. The statement is divided into three sections: effects on operations, effects on investment decisions, and effects on borrowing decisions. The report shows each effect as it relates to the Operating, Capital, and Endowment funds and total of all funds. At the bottom of the report are the beginning balances for the cash accounts and the current balance of the cash accounts. The sections leading up to these two balances are an explanation of how these changes in cash flow have occurred. Interpreting Financial Statements Boy Scouts of America 29 Updated 2/2001
  32. 32. Statement of Cash Flows Sample Take Any Council Page 0001 Statement of Cash Flows For the Period Ending 9/30/2000 Operating Fund Capital Fund Endowment Fund Total All Funds 2000 1999 2000 1999 2000 1999 2000 1999 Cash flow from operations Inc (Dec) Total Net Assets 102,302 146,851 -38,186 9,417 -28,572 151,765 35,545 308,034 Adjustments to Net Assets to reconcile Cash Flows Accounts Receivable -118,043 -101,381 7,487 -118,043 -93,894 Pledge Receivable -143,382 -83,396 -19,815 -44,450 -163,197 -127,846 Inventory -70,467 -12,401 -70,467 -12,401 Deferred Expense - Activities -63,275 -2,906 -63,275 -2,906 Deferred Expense - Camps Deferred Expense - Special Events -2,317 -2,596 -2,317 -2,596 Prepaid Expense 3,139 17,561 3,139 17,561 Accounts Payable -63,378 -2,070 295 -3,194 -9,061 -63,082 -14,325 Accrued Expense -24,075 -29,530 -3,470 -27,545 -29,530 Payroll Taxes 2,060 1,889 2,059 1,889 Custodial Accounts -130,330 -144,726 -130,330 -144,726 Deferred Income - Activities 24,088 565 24,088 565 Deferred Income - Camp 1,090 1,875 1,090 1,875 Deferred Income - Special Events 78,713 -17,576 78,713 -17,576 Deferred Income - Other Other Current Liabilities 7,008 6,582 7,007 6,582 Net Asset Adjustments -2,283 -1,780 -4,063 Deferred Status Change 272 271 Total Adjustments -499,169 -370,121 -3,175 2,513 -19,815 -53,511 -522,160 -421,119 Net Cash Flows from Operations -396,867 -223,270 -41,361 11,930 -48,387 98,254 -486,615 -113,085 Cash Flows from Investing Activities Investments - Fixed Assets 30,995 -9,395 30,995 -9,394 Short-Term Investment Purchases -12 -1,232 -3,489 -67,399 -3,501 -68,631 Short-Term Investment Sales 1,517 2,002 5,261 72,598 6,778 74,600 Long-Term Investment Purchases -576,176 -792,438 -576,176 -792,438 Long-Term Investment Sales 368,415 313,955 368,415 313,955 Net Cash Flows from Investments 1,505 770 30,995 -9,395 -205,989 -473,284 -173,489 -481,90 Cash Flows from Borrowing Interfund Loans Short-Term Notes Borrowing 140,000 194,400 140,000 194,400 Short-Term Notes Payments -16,000 -97,200 -16,000 -97,200 Long-Term Notes Borrowing 55,109 33,563 55,109 33,563 Long-Term Notes Payments -31,206 -34,020 -31,206 -34,020 Net Cash Flows from Borrowing 23,903 -457 124,000 97,200 147,903 96,743 Net Increase (Dec) in Cash Flows -395,362 -222,500 13,537 2,078 -130,376 -277,830 -512,201 -498,250 Cash at the beg. of the year 171,893 72,445 27,128 27,047 305,164 309,425 504,184 408,916 Cash at the end of the period -223,469 -150,055 40,665 29,125 174,788 31,595 -8,017 -89,333 -- End of report -- Interpreting Financial Statements Boy Scouts of America 30 Updated 2/2001
  33. 33. Statement of Cash Flows Increase/Decrease This figure is taken from the Statement of Changes in Net Assets. This is the in Total Net Assets beginning point for this report. Adjustments to Net These are accrual transactions that have occurred from January 1 until the Assets to reconcile specified date. Transactions that have an accrual basis are backed out to measure Cash Flows their influence on cash. Accounts Increase or decrease in accounts receivable since the first of January. Receivable Pledge Receivable Increase or decrease in pledge receivables since the first of January. Inventory Increase or decrease in inventory since the first of January. Deferred Expense, Increase or decrease in deferred activities expense since the first of January. Activities Deferred Expense, Increase or decrease in deferred camp expense since the first of January. Camps Deferred Expense, Increase or decrease in special fundraising events expense since the first of Special Events January. Prepaid Expense Increase or decrease in prepaid expense since the first of January. Accounts Payable Increase or decrease in accounts payable since the first of January. Accrued Expense Increase or decrease in accrued expense since the first of January. Payroll Taxes Increase or decrease in payroll taxes since the first of January. Custodial Accounts Increase or decrease in custodial accounts since the first of January. Deferred Income, Increase or decrease in deferred activities income since the first of January. Activities Deferred Income, Increase or decrease in deferred camp income since the first of January. Camp Deferred Income, Increase or decrease in special fundraising events income since the first of Special Events January. Deferred Income, Increase or decrease in other deferred income since the first of January. Other Other Current Increase or decrease in other current liabilities since the first of January. Liabilities Net Asset Increase or decrease in net asset adjustments since the first of January. Adjustments Interpreting Financial Statements Boy Scouts of America 31 Updated 2/2001
  34. 34. Transfers Increase or decrease in transfers since the first of January. Deferred Status Increase or decrease in changes that come from modification of the cost center Change status since the first of January. Total Adjustments The sum of the transactions from Accounts Receivable through Deferred Status Change. Net Cash Flows The net of increase/decrease in total net assets minus total adjustments. from Operations Cash Flows from This section shows all changes that have occurred in cash flow as a result of the Investing Activities councils investing activities. Investments, Fixed Increase or decrease in fixed assets since the first of January. Assets Short-Term Increase or decrease in short-term investment purchases since the first of January. Investment Purchases Short-Term Increase or decrease in short-term investment sales since the first of January. Investment Sales Long-Term Increase or decrease in long-term investment purchases since the first of January. Investment Purchases Long-Term Increase or decrease in long-term investment sales since the first of January. Investment Sales Net Cash Flows Total of all investment-related changes to cash flow. from Investing Cash Flows from All changes that have occurred in cash flow as a result of the councils borrowing Borrowing activities. Interfund Loans Increase or decrease in interfund loans since the first of January. Short-Term Notes Increase or decrease in short-term notes borrowing since the first of January. Borrowing Short-Term Notes Increase or decrease in short-term notes payments since the first of January. Payments Long-Term Notes Increase or decrease in long-term notes borrowing since the first of January. Borrowing Long-Term Notes Increase or decrease in long-term notes payments since the first of January. Payments Net Cash Flows Total of all borrowing transactions that have affected cash flow since the first of from Borrowing January. Interpreting Financial Statements Boy Scouts of America 32 Updated 2/2001
  35. 35. Net Total of the net cash flows from operations, investments, and borrowing. Increase/Decrease in Cash Flows Cash at the Cash position for each fund at the beginning of the fiscal year. Beginning of the Year Cash at the End of Current cash position for each fund based on a specified date. Period Analysis of Statement of Cash Flows Net Cash Flows Look at this line on your statement. This is the amount of cash that has been from Operations consumed or created in excess. At any point in the fiscal year, this will tell you why cash flow has been affected by operations. Net Cash Flows This is the amount of cash consumed or generated by changes in investment from Investments policy or practice since the first of January. Net Cash Flows from This line tells you the net amount of cash consumed or generated by borrowing or Borrowing repaying loans. Cash at the This is the amount of cash shown on the Statement of Financial Position as of Beginning of the January 1 of the years shown. Year Cash at the End of This is the amount available now and should match the figure on the Statement of the Period Financial Position for the current month being measured. Interpreting Financial Statements Boy Scouts of America 33 Updated 2/2001
  36. 36. Statement of Functional Expenses Overview This report is one of four required reports for audits. It shows the reader the amount of the council’s resources that are devoted to program, management and fund-raising. This report shows the results of expenses from the Operating, Capital, and Endowment funds. It represents the total effort during the period being measured by functional classification. The report may be printed with unallocated expenses in a separate column or as a functional report that splits unallocated expenses into program, management, and fund- raising expenses using specified percentages. These percentages should derive from a properly conducted time study of the professional staff’s time. The study should be representative of all four quarters of the year and should be repeated at least every three years. The report does the math for the functional presentation showing the percentages of expense spent on program, management, and fund-raising. Interpreting Financial Statements Boy Scouts of America 34 Updated 2/2001
  37. 37. Statement of Functional Expenses Sample Take Any Council Page 0001 Statement of Functional Expenses Thru Accounting Period 9 Ending 9/30/2000 Funds 1 Thru 3 ------------------------------------------------------------------------------------------------------------------------------------ -------- Supporting Services -------- Program Management Fundraising Support Unallocated Total Expenses Expenses Service & General Services Expenses 2000 1999 ------------------------------------------------------------------------------------------------------------------------------------ Employee Compensation Salaries 677,393 33,650 67,301 100,951 778,344 734,741 Employee Benefits 77,116 4,275 8,550 12,824 89,941 85,264 Payroll Taxes 64,166 2,823 5,645 8,468 72,634 68,750 Employee Related Expenses 4,051 238 477 715 4,765 15,954 Total Employee Compensation 822,727 40,986 81,972 122,958 945,685 904,709 Other Expenses Professional Fees 31,272 1,528 10,545 12,073 43,345 28,332 Supplies 321,241 1,590 5,857 7,446 328,688 321,745 Telephone 14,871 555 1,111 1,666 16,537 16,396 Postage and Shipping 30,153 771 6,461 7,232 37,385 38,857 Occupancy 120,246 16,024 1,355 17,379 137,625 134,486 Rent and Maintenance of Equipment 10,899 11,439 114 11,553 22,452 24,700 Printing and Publications 46,932 1,864 10,588 12,453 59,385 29,207 Travel 104,820 3,469 6,939 10,408 115,228 100,718 Conferences and Meetings 19,685 854 4,338 5,192 24,877 19,832 Specific Asst. to Individuals 6,294 54 107 161 6,455 1,504 Recognition Awards 50,773 353 9,098 9,450 60,224 60,799 Interest Expense 6,668 392 785 1,177 7,845 5,853 Insurance 63,675 520 1,041 1,561 65,236 82,647 Other Expenses 12,391 703 1,652 2,355 14,745 13,964 Total Other Expenses 839,921 40,115 59,991 100,105 940,026 879,038 Expenses Before Depreciation 1,662,647 81,101 141,963 223,064 1,885,711 1,783,747 Depreciation of Buildings/Equipment 150,909 4,476 8,953 13,429 164,339 135,839 Total Functional Expense 1,813,557 85,577 150,916 236,493 2,050,049 1,919,586 Functional Expense Percentages* 88.47% 4.17% 7.36% 100.00% Unallocated Dollars Split by Time Study Using the Following Percentages Program 85.00% Management and General 5.00% Fundraising 10.00% *Percentage Figures After Combining the Allocated and Unallocated Dollars - End of report – Interpreting Financial Statements Boy Scouts of America 35 Updated 2/2001

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